Second Chamber of Mexican Parliament approves mandatory ETS

On 12 December 2017, the Cámara de Diputados, the second Chamber of the Mexican Parliament, amended the General Law on Climate Change (LGCC) mandating the establishment of a mandatory ETS. Mexico already introduced a mandatory reporting system (the National Emissions Register or RENE for its acronym in Spanish) for both direct and indirect GHG emissions in 2014; the original climate change law had also provided the basis for establishing a voluntary ETS in Mexico, which so far had not been operationalized (see ICAP factsheet on Mexico). With the latest amendments, which still need to be approved by the Senate (first chamber of Parliament), there is now the basis to introduce a mandatory system.

Together with a voluntary ETS Simulation, which is currently running and involves major companies in the power generation, manufacturing, and transport sector, the approved amendments to the climate change law are another key step towards achieving Mexico’s goal to implement a national ETS by 2018.

The Ministry of Environment and Natural Resources (SEMARNAT) announced that the market rules for an ETS and updated rules for the National Emissions Register will be published in the first half of 2018. The market will then officially start operating in two phases in August 2018. The first phase (pilot phase) will last for three years until August 2021. Subsequently, the rules will be updated for the start of the second phase (formal phase), which will also be in line with the start of the first accounting period under the Paris Agreement in 2021.

The Mexican Environment Minister, Mr. Rafael Pacchiano, emphasized at the One Planet Summit in Paris that the amendments to the climate change law incorporate Mexico’s Paris commitments into national legislation.